Introduction
In Mexico City’s trendy neighborhoods like Roma, Condesa, Hipódromo, and Juárez, it’s becoming increasingly difficult to find local businesses. Amidst high-end restaurants, international chains, and sastrerías (tailor shops), these local establishments strive to survive. The influx of affluent residents, both local and foreign, has driven up demand for prestigious businesses, displacing smaller, local shops.
The Impact of Affluent Residents
Alejandro Delgado, Country Manager of SiiLA México, notes that these affluent residents are driving the demand for upscale businesses. This shift has led to the proliferation of renowned restaurants, cafes, and bars that cater to this new market. Delgado explains, “There’s a market now that may not have existed five years ago or in smaller numbers.”
Gentrification and Urban Planning Issues
Giulliano Lopresti, CEO of Grupo Quebracho, argues that the displacement of local businesses is not solely due to gentrification but also results from poor urban planning and a lack of public policy supporting local businesses.
“It’s overly simplistic to blame foreigners or real estate developers for rising property prices,” Lopresti says. “The issue lies more with the public sector and poor urban planning.” He points out that after the pandemic, the Mexico City government reformed Article 15 bis of the Urban Development Law’s Regulations, allowing micro and small businesses to obtain a Land Use Certificate based on their established activity—provided they had been operating for at least five years.
However, this initiative was marred by irregularities and corruption. “Amidst corruption, poor regulation, and influence peddling, the most profitable ventures secured the permits they wanted and displaced less lucrative ones,” Lopresti explains. “Gradually, we’ve lost pollerías (chicken shops), panaderías (bakeries), and verdulerías (vegetable stores), turning everything into high-rent restaurants.”
Local Businesses Fighting for Survival
Despite the arrival of large businesses, local establishments have found ways to persist. In Condesa, a traditional-looking sastrería (tailor shop) has maintained its charm for 60 years. The current owner, whose family has run it for generations, pays 19,000 pesos in rent—a significant challenge to keep the business afloat.
To avoid closure, cover employee salaries, and manage expenses, the owner has had to increase prices, a move that hasn’t pleased all customers but has been understood by some.
Short-Lived Businesses
Two blocks from Parque España, a small appliance repair workshop has survived for over 60 years. Despite its location amid cafes and beauty salons, the owner says they’re currently with their third generation of landlords who keep prices affordable.
For 25 years, the workshop’s owner has worked alone due to insufficient income to hire more staff. “Previously, there were 10-12 employees, supporting over ten families,” he recalls.
Mauricio has witnessed changes in Parque México and surrounding streets, where grocery stores, tortillerías (taco shops), and bakeries once thrived but have been replaced by cafes and restaurants.
He notes that new businesses rarely last, closing within two months or failing to survive beyond three years due to high rents ranging from 19,000 to 30,000 pesos for small spaces.
Exorbitant Rents
Near Parque México, a barber shop stands out for its 1950s-inspired appearance. The business began 50 years ago when three barbers pooled resources, paying 250 pesos in rent.
Only Pablo remains; he now pays 30,000 pesos in rent after the original owner’s daughter took over and raised prices significantly over the past decade.
“She came with a strong hand and drastically increased our rent,” Pablo says. “We sign an annual contract, but each renewal brings a substantial increase.”
Key Questions and Answers
- What is causing the displacement of local businesses? Poor urban planning, corruption, and a lack of public policy supporting local businesses contribute to this issue.
- How have local business owners adapted to rising rents? Many have increased prices, worked longer hours, and, in some cases, reduced staff to cope with financial pressures.
- What role do affluent residents play in this shift? Their demand for high-end businesses drives up property values and rents, making it difficult for local establishments to survive.
- Why are new businesses struggling to stay open? High rents for small spaces, coupled with insufficient income to hire more employees, often lead to short-lived businesses.
